David Zaslav, Discovery's President and Chief Executive Officer said, "The strength of Discovery's brands and the value of our content to consumers, distributors and advertisers alike were further demonstrated in our third quarter financial results. The appeal of our programming allowed us to continue to take advantage of the sustained health of the global ad market and further leverage existing and emerging distribution platforms worldwide. The breadth of our global distribution enables us to capitalize on the increasing penetration of traditional distribution models, while the diversity and appeal of our content allows us to strategically leverage evolving delivery methods. We remain focused on generating sustained financial results while thoughtfully investing in our brands and platforms so that we can take advantage of new and existing distribution opportunities around the globe."

Third quarter revenues of $1,095 million increased $169 million, or 18%, over the third quarter a year ago, led by 19% growth at U.S. Networks and 19% growth at International Networks. Adjusted Operating Income Before Depreciation and Amortization(1) ("OIBDA") grew 15% to $479 million, driven by a 9% increase at U.S. Networks and a 20% increase at International Networks. The domestic results benefitted from significant additional licensing revenues under an extended and expanded licensing agreement.

Third quarter net income from continuing operations available to Discovery Communications, Inc. stockholders of $238 million ($0.59 per diluted share) increased $77 million compared to $161 million ($0.37 per diluted share) for the third quarter a year ago. The current quarter results reflect the strong operating performance partially offset by higher taxes.

Free cash flow was $314 million for the third quarter, a decrease of $32 million from the third quarter of 2010, as the increased operating performance was more than offset by higher long-term incentive compensation and tax payments, as well as lower working capital. Free cash flow is defined as cash provided by operating activities less acquisitions of property and equipment.

(1) See the definition of Adjusted Operating Income Before Depreciation and Amortization on page 4.

SEGMENT RESULTS

(dollars in millions)

Three Months Ended September 30,

Nine Months Ended September 30,

2011

2010

Change

2011

2010

Change

Revenues:

U.S. Networks

$

695

$

585

19%

$

1,942

$

1,751

11%

International Networks

363

304

19%

1,054

893

18%

Education and Other

37

38

(3%)

117

108

8%

Corporate and Eliminations

—

(1)

NM

—

6

NM

Total Revenues

$

1,095

$

926

18%

$

3,113

$

2,758

13%

Adjusted OIBDA:

U.S. Networks

$

378

$

346

9%

$

1,107

$

1,018

9%

International Networks

156

130

20%

473

384

23%

Education and Other

3

1

200%

16

7

129%

Corporate and Eliminations

(58)

(59)

2%

(180)

(171)

(5%)

Total Adjusted OIBDA

$

479

$

418

15%

$

1,416

$

1,238

14%

U.S. Networks

(dollars in millions)

Three Months Ended September 30,

Nine Months Ended September 30,

2011

2010

Change

2011

2010

Change

Revenues:

Distribution

$

350

$

264

33%

$

898

$

790

14%

Advertising

322

304

6%

973

899

8%

Other

23

17

35%

71

62

15%

Total Revenues

$

695

$

585

19%

$

1,942

$

1,751

11%

Adjusted OIBDA

$

378

$

346

9%

$

1,107

$

1,018

9%

Adjusted OIBDA Margin

54%

59%

57%

58%

U.S. Networks' revenues in the third quarter of 2011 increased 19% to $695 million primarily driven by distribution and advertising revenue growth. Distribution revenue grew 33% largely from $77 million of additional licensing revenue driven by the delivery of selected library titles under an extended and expanded licensing agreement. The current quarter results also included higher rates and subscriber growth primarily from networks carried on the digital tier, partially offset by $4 million due to the absence of Discovery Health following its contribution into the OWN joint venture on January 1, 2011. Advertising revenue increased 6% due to increased pricing and higher sellouts, partially offset by the absence of $15 million due to the removal of Discovery Health. Excluding the additional revenue in the current year from the expanded licensing agreement, as well as Discovery Health from the 2010 results, advertising revenues grew 11% and distribution revenues grew 5% compared with the third quarter a year ago.

Adjusted OIBDA increased 9% to $378 million primarily reflecting the 19% revenue growth partially offset by 33% higher operating expenses, which included an additional $24 million of content impairments versus the third quarter a year ago and $11 million in expenses associated with the expanded licensing agreement. Excluding the higher content impairment charges and expenses associated with the expanded licensing agreement in the current year, as well as Discovery Health from the 2010 results, Adjusted OIBDA was in-line with a year ago as the revenue growth was offset by increased operating expenses primarily due to higher content amortization and marketing costs.

International Networks

(dollars in millions)

Three Months Ended September 30,

Nine Months Ended September 30,

2011

2010

Change

2011

2010

Change

Revenues:

Distribution

$

230

$

192

20%

$

665

$

573

16%

Advertising

120

98

22%

354

286

24%

Other

13

14

(7%)

35

34

3%

Total Revenues

$

363

$

304

19%

$

1,054

$

893

18%

Adjusted OIBDA

$

156

$

130

20%

$

473

$

384

23%

Adjusted OIBDA Margin

43%

43%

45%

43%

International Networks' revenues for the third quarter increased 19% to $363 million primarily led by distribution revenue growth of 20% and advertising revenue growth of 22%. Excluding the impact of foreign currency fluctuations, revenues increased 12% led by 13% distribution revenue growth, mainly from increased subscribers across all regions. Advertising revenue in local currency terms was up 16% during the third quarter primarily from higher pricing across all regions, as well as expansion of feeds across Western Europe, Asia-Pacific and CEEMEA.

Adjusted OIBDA increased 20% to $156 million reflecting the 19% revenue growth, partially offset by a 19% increase in operating expenses. Excluding the impact of foreign currency, Adjusted OIBDA increased 20% as the 12% revenue growth was partially offset by a 7% increase in operating expenses primarily due to higher content amortization and sales commissions.

Education and Other

(dollars in millions)

Three Months Ended September 30,

Nine Months Ended September 30,

2011

2010

Change

2011

2010

Change

Revenues

$

37

$

38

(3%)

$

117

$

108

8%

Adjusted OIBDA

$

3

$

1

200%

$

16

$

7

129%

Adjusted OIBDA Margin

8%

3%

14%

6%

Education and Other third quarter revenues decreased $1 million, as increased Education revenue from growth in corporate partnerships and higher streaming volumes was offset by lower revenue from the Creative Sounds Services business. Adjusted OIBDA increased $2 million compared to the third quarter of 2010 from a decrease in content expense and sales commissions.

STOCK REPURCHASE

During the quarter, the Company pursuant to its existing stock repurchase program repurchased 9.79 million shares of its Series C common stock at an average price of $36.30 per share for an aggregate purchase price of approximately $355 million.

From October 1, 2011 through October 31, 2011, the Company repurchased 2.71 million shares of its Series C common stock for approximately $101 million.

The Company has repurchased 25.86 million shares of Series C common stock under its $2.0 billion stock repurchase plan to date at an aggregate price of approximately $938 million. Under the stock repurchase program, management is authorized to purchase shares from time to time through open market purchases at prevailing prices or privately negotiated transactions, subject to market conditions and other factors.

OTHER ITEMS

The Company has expanded the components of distribution revenue reported in its financial statements to include content arrangements and other subscription services for content. Accordingly, prior period financial information has been reclassified so that the basis of the presentation is consistent with that of the 2011 financial information.

FULL YEAR 2011 OUTLOOK

For the full year ending December 31, 2011, Discovery Communications, Inc. expects total revenue between $4,175 million and $4,250 million, Adjusted OIBDA between $1,925 million and $1,975 million, and net income available to Discovery Communications, Inc. stockholders of $1,025 million to $1,075 million. Our outlook incorporates current foreign exchange rates for revenues and expenses and the current share price for mark-to-market stock-based compensation calculations.

NON-GAAP FINANCIAL MEASURES

Adjusted OIBDA and Free Cash Flow

In addition to the results prepared in accordance with U.S. generally accepted accounting principles ("GAAP") provided in this release, the Company has presented Adjusted OIBDA and free cash flow. The Company evaluates the operating performance of its segments based on financial measures such as revenues and adjusted operating income before depreciation and amortization ("Adjusted OIBDA"). Adjusted OIBDA is defined as revenues less costs of revenues and selling, general and administrative expenses excluding: (i) mark-to-market stock-based compensation, (ii) depreciation and amortization, (iii) amortization of deferred launch incentives, (iv) exit and restructuring charges, (v) certain impairment charges, and (vi) gains (losses) on business and asset dispositions. The Company uses this measure to assess operating results and performance of its segments, perform analytical comparisons, identify strategies to improve performance and allocate resources to each segment. The Company believes Adjusted OIBDA is relevant to investors because it allows them to analyze the operating performance of each segment using the same metric management uses and also provides investors a measure to analyze the operating performance of each segment against historical data. The Company excludes mark-to-market stock-based compensation, exit and restructuring charges, certain impairment charges, and gains (losses) on business and asset dispositions from the calculation of Adjusted OIBDA due to their volatility or non-recurring nature. The Company also excludes depreciation of fixed assets and amortization of intangible assets and deferred launch incentive, as these amounts do not represent cash payments in the current reporting period.

The Company defines free cash flow as cash provided by operating activities less acquisitions of property and equipment. The Company uses free cash flow as it believes it is an important indicator for management and investors of the Company's liquidity, including its ability to reduce debt, make strategic investments and return capital to stockholders.

Adjusted OIBDA and free cash flow are non-GAAP measures, and should be considered in addition to, but not as a substitute for, operating income, net income, cash flows provided by operating activities and other measures of financial performance reported in accordance with GAAP. Please review the supplemental financial schedules beginning on page 9 for reconciliations to GAAP measures.

Conference Call Information

Discovery Communications, Inc. will host a conference call today at 4:30 p.m. ET to discuss its third quarter results. To listen to the call, visit http://www.discoverycommunications.com or dial 1-866-713-8565 inside the U.S. and 1-617-597-5324 outside of the U.S., using the following passcode: 30540780.

Cautionary Statement Concerning Forward-Looking Statements

This press release contains certain forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties. These statements are based on information available to the Company as of the date hereof, and the Company's actual results could differ materially from those stated or implied, due to risks and uncertainties associated with its business, which include the risk factors disclosed in its Annual Report on Form 10-K filed with the SEC on February 18, 2011. Forward-looking statements include statements regarding the Company's expectations, beliefs, intentions or strategies regarding the future, and can be identified by forward-looking words such as "anticipate," "believe," "could," "continue," "estimate," "expect," "intend," "may," "should," "will" and "would" or similar words. Forward-looking statements in this release include, without limitation, the full year 2011 outlook and plans for stock repurchases. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

DISCOVERY COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited; in millions, except per share amounts)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2011

2010

2011

2010

Revenues:

Distribution

$

580

$

456

$

1,563

$

1,363

Advertising

442

402

1,328

1,185

Other

73

68

222

210

Total revenues

1,095

926

3,113

2,758

Costs and expenses:

Costs of revenues, excluding depreciation and amortization

342

261

903

782

Selling, general and administrative

295

306

864

894

Depreciation and amortization

30

32

90

98

Restructuring and impairment charges

2

15

7

18

Gains on dispositions

—

—

(129)

—

Total costs and expenses

669

614

1,735

1,792

Operating income

426

312

1,378

966

Interest expense, net

(56)

(49)

(154)

(155)

Loss on extinguishment of debt

—

—

—

(136)

Other expense, net

(5)

(16)

(10)

(57)

Income before income taxes

365

247

1,214

618

Provision for income taxes

(127)

(83)

(417)

(171)

Income from continuing operations, net of taxes

238

164

797

447

(Loss) income from discontinued operations, net of taxes

(1)

25

(1)

25

Net income

237

189

796

472

Net income attributable to noncontrolling interests

—

(3)

—

(10)

Net income attributable to Discovery Communications, Inc.

237

186

796

462

Stock dividends to preferred interests

—

—

—

(1)

Net income available to Discovery Communications, Inc. stockholders

$

237

$

186

$

796

$

461

Income per share from continuing operations available to Discovery Communications, Inc. stockholders:

Basic

$

0.60

$

0.38

$

1.97

$

1.03

Diluted

$

0.59

$

0.37

$

1.95

$

1.01

(Loss) income per share from discontinued operations available to Discovery Communications, Inc. stockholders:

Basic

$

0.00

$

0.06

$

0.00

$

0.06

Diluted

$

0.00

$

0.06

$

0.00

$

0.06

Net income per share available to Discovery Communications, Inc. stockholders:

Basic

$

0.60

$

0.44

$

1.97

$

1.08

Diluted

$

0.59

$

0.43

$

1.95

$

1.07

Weighted average shares outstanding:

Basic

398

426

404

425

Diluted

401

431

408

431

DISCOVERY COMMUNICATIONS, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited; in millions)

September 30,

December 31,

2011

2010

ASSETS

Current assets:

Cash and cash equivalents

$

1,032

$

466

Receivables, net

976

880

Content rights, net

83

83

Deferred income taxes

53

81

Prepaid expenses and other current assets

155

225

Total current assets

2,299

1,735

Noncurrent content rights, net

1,293

1,245

Property and equipment, net

371

399

Goodwill

6,299

6,434

Intangible assets, net

577

605

Investments

816

455

Other noncurrent assets

146

146

Total assets

$

11,801

$

11,019

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

48

$

87

Accrued liabilities

438

393

Deferred revenues

123

114

Current portion of stock-based compensation liabilities

40

118

Current portion of long-term debt

20

20

Other current liabilities

38

53

Total current liabilities

707

785

Long-term debt

4,229

3,598

Deferred income taxes

354

304

Other noncurrent liabilities

108

99

Total liabilities

5,398

4,786

Commitments and contingencies

Equity:

Preferred stock

2

2

Common stock

3

3

Additional paid-in capital

6,460

6,358

Treasury stock, at cost: 23 and 3 Series C common shares at 2011 and 2010, respectively

(837)

(105)

Retained earnings

796

—

Accumulated other comprehensive loss

(22)

(33)

Total Discovery Communications, Inc. stockholders' equity

6,402

6,225

Noncontrolling interests

1

8

Total equity

6,403

6,233

Total liabilities and equity

$

11,801

$

11,019

DISCOVERY COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited; in millions)

Nine Months Ended September 30,

2011

2010

OPERATING ACTIVITIES

Net income

$

796

$

472

Adjustments to reconcile net income to cash provided by operating activities:

Content expense

623

526

Intangible impairment charges

—

11

Stock-based compensation

70

153

Depreciation and amortization

90

100

Gains on dispositions

(129)

(12)

Deferred income tax expense (benefit)

71

(89)

Noncash portion of loss on extinguishment of debt

—

12

Other noncash expenses, net

48

46

Changes in operating assets and liabilities:

Receivables, net

(127)

(41)

Content rights

(653)

(558)

Accounts payable and accrued liabilities

8

(8)

Stock-based compensation liabilities

(107)

(128)

Income tax receivable

91

(11)

Other, net

(21)

(28)

Cash provided by operating activities

760

445

INVESTING ACTIVITIES

Purchases of property and equipment

(42)

(29)

Proceeds from dispositions, net

—

24

Business acquisitions, net of cash acquired

—

(38)

Investments in and advances to equity method investees

(93)

(71)

Cash used in investing activities

(135)

(114)

FINANCING ACTIVITIES

Borrowings from long term debt, net of discounts and issuance costs

639

2,970

Principal repayments of long-term debt

—

(2,883)

Principal repayments of capital lease obligations

(16)

(8)

Repurchases of common stock

(732)

(38)

Cash distributions to noncontrolling interests

(7)

(21)

Proceeds from stock option exercises

43

27

Excess tax benefits from stock-based compensation

18

9

Cash (used in) provided by financing activities

(55)

56

Effect of exchange rate changes on cash and cash equivalents

(4)

6

NET CHANGE IN CASH AND CASH EQUIVALENTS

566

393

Cash and cash equivalents, beginning of period

466

623

CASH AND CASH EQUIVALENTS, END OF PERIOD

$

1,032

$

1,016

DISCOVERY COMMUNICATIONS, INC.

SUPPLEMENTAL FINANCIAL DATA

RECONCILIATION OF ADJUSTED OPERATING INCOME BEFORE

DEPRECIATION AND AMORTIZATION

(unaudited; in millions)

Three Months Ended September 30, 2011

Adjusted

Operating

Income Before

Depreciation and

Amortization

Depreciation

and

Amortization

Amortization of

Deferred Launch Incentives

Mark-to-Market

Stock-Based

Compensation

Other (a)

Operating

Income

U.S. Networks

$ 378

$ (4)

$ (3)

$ —

$ —

$ 371

International Networks

156

(11)

(10)

—

—

135

Education and Other

3

(1)

—

—

—

2

Corporate and Eliminations

(58)

(14)

—

(8)

(2)

(82)

Total

$ 479

$ (30)

$ (13)

$ (8)

$ (2)

$ 426

Three Months Ended September 30, 2010

Adjusted

Operating

Income Before

Depreciation and

Amortization

Depreciation

and

Amortization

Amortization of

Deferred Launch Incentives

Mark-to-Market

Stock-Based

Compensation

Other (a)

Operating

Income

U.S. Networks

$ 346

$ (5)

$ (2)

$ —

$ —

$ 339

International Networks

130

(10)

(9)

—

(3)

108

Education and Other

1

(2)

—

—

(11)

(12)

Corporate and Eliminations

(59)

(15)

—

(48)

(1)

(123)

Total

$ 418

$ (32)

$ (11)

$ (48)

$ (15)

$ 312

(a) For the three months ended September 30, 2011, amount represents restructuring charges of $2 million. For the three months endedSeptember 30, 2010, amounts represent asset impairments of $11 million and restructuring charges of $4 million.

DISCOVERY COMMUNICATIONS, INC.

SUPPLEMENTAL FINANCIAL DATA

RECONCILIATION OF ADJUSTED OPERATING INCOME BEFORE

DEPRECIATION AND AMORTIZATION

(unaudited; in millions)

Nine Months Ended September 30, 2011

Adjusted

Operating

Income Before

Depreciation and

Amortization

Depreciation

and

Amortization

Amortization of

Deferred Launch Incentives

Mark-to-Market

Stock-Based

Compensation

Other (a)

Operating

Income

U.S. Networks

$ 1,107

$ (12)

$ (7)

$ —

$ 126

$ 1,214

International Networks

473

(33)

(32)

—

(2)

406

Education and Other

16

(4)

—

—

—

12

Corporate and Eliminations

(180)

(41)

—

(31)

(2)

(254)

Total

$ 1,416

$ (90)

$ (39)

$ (31)

$ 122

$ 1,378

Nine Months Ended September 30, 2010

Adjusted

Operating

Income Before

Depreciation and

Amortization

Depreciation

and

Amortization

Amortization of

Deferred Launch Incentives

Mark-to-Market

Stock-Based

Compensation

Other (a)

Operating

Income

U.S. Networks

$ 1,018

$ (16)

$ (6)

$ —

$ —

$ 996

International Networks

384

(29)

(26)

—

(6)

323

Education and Other

7

(5)

—

—

(11)

(9)

Corporate and Eliminations

(171)

(48)

—

(124)

(1)

(344)

Total

$ 1,238

$ (98)

$ (32)

$ (124)

$ (18)

$ 966

(a) For the nine months ended September 30, 2011 amounts represent a pre-tax gain of $129 million as a result of contributing DiscoveryHealth to the OWN joint venture and restructuring charges of $7 million. For the nine months ended September 30, 2010 amounts represent asset impairments of $11 million and restructuring charges of $7 million.